On 26 Jun 2025, the HKMA clarifies that deposits under the Money Safe arrangement may be treated as 'other established relationships' under existing rule 39 of the Banking (Liquidity) Rules for LCR and NSFR calculations, enabling preferential liquidity treatment. The HKMA mandates that institutions meet all qualifying criteria to apply the treatment and strongly encourages banks to implement MS or interim measures promptly, including customer promotion via incentives and education.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Liquidity Treatment Clarification
On 26 Jun 2025, the HKMA clarifies that Category 1 authorized institutions may treat deposits protected under the 'Money Safe' (MS) arrangement as an 'other established relationship' (as defined under rule 39 of the Banking (Liquidity) Rules) for Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) calculations. This treatment enables deposits with partial MS protection to qualify for preferential outflow rates (e.g., 3% instead of 10% under LCR) and more favourable stable funding factors (e.g., 95% instead of 90% under NSFR), aligning them with 'stable retail deposits' rather than 'less stable retail deposits'.
Scope and Implementation
The HKMA confirms this treatment applies to both MS and interim measures similar to MS launched by Category 1 institutions, effective from the date of this circular. The HKMA will update the Supervisory Policy Manual Module LM-1 to incorporate this clarification alongside liquidity treatments for cryptoassets, consistent with the December 2022 Basel standard. Institutions must still satisfy all other qualifying criteria under rule 39 of the BLR and the Banking (Liquidity Coverage Ratio — Calculation of Total Net Cash Outflows) Code to apply the preferential treatment.
HKMA Encouragement and Guidance
The HKMA strongly encourages banks to implement MS as soon as practicable, adopt interim MS-like measures if not yet deployed, and proactively promote MS to customers—including through incentives and consumer education. This liquidity treatment aims to facilitate banks' adoption of MS as an anti-fraud and anti-scam measure for customer deposits.
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